Summary

Digital advertising mirrors the subprime mortgage crisis: tech over-relies on bad programmatic ad inventory just as banks over-relied on bad mortgages. Attention has been commodified through standardization and real-time bidding, creating opacity that hides fraud and ineffective impressions. A global savings glut in ad spending inflates the bubble further. Surveillance capitalism invades privacy, manipulates behavior, and promotes polarization. The solution: controlled demolition through mandated disclosure and rethinking whether we want an internet built for advertising.

Key Takeaways

Notes

Introduction

• Search ads: 46% digital ads (78% Google)
• Display ads: 32% (39% Facebook)
• Ads: “marketplace for your attention”
• Programmatic ads
• Do we want to architect the web for better?

1: The plumbing

• Attention sellers, buyers, agencies
• RTB: real-time bidding for ads
• DSP, SSP: demand, supply-side platforms
• Subprime mortgage crisis: financial institutions’ over-reliance on bad mortgages
• Subprime attention crisis: tech’s over-reliance on programmatic ads infra
• ↑ would impact all internet (subscriptions)
• Are internet platforms “too big to fail”?

2: Market convergence

• AdWords ↔ financial markets
• Commodification of attention
• ↑ standardization, abstraction, speculation
• IAB: interactive advertising bureau
  • Standards for advertising to function
  • Eg. consensus for “impression”
• Have ads markets made the world riskier?

3: Opacity

• Does advertising work?
• Wanamaker’s law: 1/2 ad money wasted
• Data is only illusion of transparency
• 3 reasons for opaqueness:
  • Algorithmic trading
  • Creation of dark pools of liquidity
  • Dominance of platforms → opacity
• Dark pools of liquidity: non-public markets
  • No price, target transparency

4: Subprime attention

• Opacity → risk in market → crisis
• Advertising sellers package attention
• CDOs: collateralized debt obligations
• Attention is sub-prime: online ads ignored
• Subprime attention:
  • Ads ineffective for ages 20-40
    • Ages 65+ are 40% of market
  • Ad blockers
  • Fraud: fake traffic (20-28%)
    • Domain spoofing
  • Privacy

5: Inflating the bubble

• Global savings glut (GSG) hypothesis: (2008) money had to go somewhere → risky
• ↑ same with current ad spending: nowhere else to go
• Agency arbitrage → perverse incentives

6: Exploding the bubble

• Solution: controlled demolition
• Critiques to ads internet:
  • Surveillance capitalism: relies on invading privacy of consumers
  • Incentive to manipulate user behavior, attention → bad for health
  • Promote shocking content → polarization, echo chambers
• Programmatic ads → commoditization of attention → standardization (eg. likes, RT)
• Mandated disclosure of ad info (eg. SEC)